Financial institutions are increasingly clearing financial transactions using electronic systems such as the Automated Clearinghouse (“ACH”) network. The ACH network is a nationwide electronic funds transfer system supported by several operators, including the Federal Reserve Banks and other institutions. The ACH network is governed by a set of rules, which are administered by the National Automated Clearinghouse Association (“NACHA”). Financial institutions generally use the ACH network to clear low value, high volume financial transactions. Financial institutions collect transactions and package them in batched ACH files, according to the NACHA rules, for forwarding to other institutions. Typically, the transactions are bundled as ACH items in a single ACH file before being transmitting over the ACH network. The terms “financial transaction,” “transaction,” “ACH transaction,” “ACH item,” and “item” are used interchangeably herein to refer to any batched processed electronic payment, whether international or domestic. The terms “ACH file,” “electronic file,” and “file” are used interchangeably herein to refer to any collection of batched and/or unbatched ACH items.
The ACH network is being expanded for use with financial institutions in other countries. One of the challenges presented by international ACH transactions is the ability to police fraudulent and criminal financial transactions. Certain international financial transactions are subject to monitoring to identify criminals or fraudulent activity. For example, wire transfers, which typically involve a single, large value transaction, are often screened to ensure the payment is not originating from or destined for an account held by a criminal. Screening wire transfers assists governments with enforcing laws and reducing criminal activity. Such screens typically utilize a false positives database to prevent improper rejection of certain screened items. A false positives database can include, for example, information regarding individuals with names similar to those named on a screening list. Without a false positives database, certain data shows that between ten and fifteen percent of rejected items will be false positives.
Screening generally has not been applied to the low value, high volume transactions cleared over the ACH network. Accordingly, there is a need in the art for a system and method that efficiently screens a high volume of financial transactions. Specifically, there is a need to screen ACH items to ensure that criminal and fraudulent activity is not being conducted through international ACH transactions. There is a further need to conduct the screening efficiently and to avoid false positives so as to minimize the number of ACH items that are suspended, returned, or investigated.